There is nothing more exciting for a car collector than cruising down the road in a well-maintained, shiny classic car. Even non-car enthusiasts appreciate and marvel at classic cars. However, before you place your pride and joy on the road, you must protect your investment by purchasing classic car insurance.
Unlike your everyday automobile insurance, the underwriting process for classic car insurance is slightly different. It is strongly advised to use an insurance company whose specialty is classic and antique cars. A good place to begin looking for such a company as buyclassiccars.com. They have a listing of classic car insurers in the US, Canada and UK.
Here are a few things to be aware of when purchasing classic car insurance:
Classic Car Valuation
The classic car valuation clause is a bit different than what you would find on your family car. There are three different options to choose from:
- Actual Cash Value: This means the insurer will use the current market value of the car and deduct depreciation. This type of valuation is fine for the family mini-van, but not for your classic car. If your classic car is highly valued, this type of clause is not the way to go. If your car is over 20 years old, depreciating the current value will not adequately reimburse you in the event of a loss.
- Stated Amount: This type of valuation sets the maximum amount your insurance policy will pay in the event of a claim. It will pay the lesser of the following: 1) Stated amount, 2) the cost to repair the vehicle (but will not exceed the stated amount), or 3) the actual cash value. Because this valuation does not address the true value of your classic vehicle, this is not the recommended way to go.
- Agreed Value: This valuation is just as it sounds. Both you and the insurance company agree upon the fair market value of the vehicle prior to binding coverage. At each policy renewal, the vehicle value is reviewed as the market value may fluctuate from year to year. This valuation works the best for all parties involved.
Make sure your insurance provides coverage for the way you use your classic car. In addition to driving it to and from car shows, do you use it to run an occasional errand?
Let’s face it, there is a ‘look at me’ quality to classic cars that driving them to and from car shows alone may not be enough. The additional ‘errand’ exposure is taken into consideration when underwriting a classic car, so before you get ready to show off your car buy purchasing a gallon of milk at the local store; make sure your car is covered for such trips.
Know how your insurance company wants you to store your classic car. Some policies require the car to be stored in a locked garage when not being driven. Many companies do not provide coverage if the vehicle is left unattended in a parking lot.
Taking a long weekend trip in your classic car and leaving it in the hotel parking lot overnight might be a reason to deny coverage in the event of a loss.
Be sure to review the policy terms and conditions of your classic auto policy. Don’t assume that because you have a regular auto insurance policy that you know how classic car insurance works. There are differences and you should be familiar with them prior to a loss.
If you have any questions, make sure to discuss them with your insurance agent.